WTI holds gains around $61.50 due to smaller output hike by OPEC+

• WTI gains ground as OPEC+ decided to increase output by 137,000 barrels per day in November, falling short-than-expected.
• Oil prices receive support from the rising odds of the US Federal Reserve delivering rate cuts.
• Fed Governor Miran reaffirmed his view that the central bank has considerable room to lower rates toward a neutral level.

West Texas Intermediate (WTI) Oil price is extending its gains, trading around $61.60 per barrel during the early European hours on Monday. Crude Oil prices received support after the Organization of the Petroleum Exporting Countries and its allies, including Russia, known as OPEC+, announced a smaller-than-expected production hike, easing concerns over rising supply.

The group decided on Sunday to increase output by 137,000 barrels per day (bpd) in November, matching October's modest rise and falling short of earlier expectations. Ahead of the meeting, Russia might have advocated for an increase of 137,000 bpd to avoid pressuring prices, though Saudi Arabia preferred double, triple, or even quadruple that figure to accelerate its market share recovery, per Reuters.

OPEC+ noted that the recent decision is a response to a steady global economic outlook and current healthy market fundamentals, noting that output adjustments may be paused or reversed if conditions change. OPEC+ had already reversed a 2.2 million bpd production cut, one year ahead of schedule, and was in the process of unwinding an additional 1.65 million bpd reduction by the end of September.

Oil prices also draw support from the increased likelihood of the US Federal Reserve (Fed) delivering rate cuts in the upcoming meetings. Lower borrowing costs would help in increasing economic activities in the United States (US) and Oil demand.

The CME FedWatch Tool suggests that markets are now pricing in a 95% chance of a Fed rate cut in October and an 84% possibility of another reduction in December. Fed Governor Stephen Miran doubled down on his belief that the Fed has a lot more room to cut its way to neutral interest rates. Miran also said that "I hope we'll have the needed data by the October FOMC meeting." "Policy has become much more restrictive this year."